New rules under review to curb credit card debt

KUALA LUMPUR: Bank Negara is set to tighten credit card guidelines in order to curb credit card debt, especially among those aged 30 and below.


The guidelines are still under review and will be proposed to the government soon, a Bank Negara spokesperson said when contacted.

If approved, the new guidelines would increase the minimum annual income requirement from RM18,000 to RM 24, 000.

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It would also limit each person to own credit cards from two banks only, the report said. “Many in the lower income category and below the ages of 30 have been blacklisted and declared bankrupt due to increasing debts,” a Bank Negara official was quoted as saying.

School of Communication lecturer Tharshni Kumarasamy, who felt pressured to obtain her first credit card in 2006 in a quick need for cash, agreed with the new guidelines.

“The earning power of the general Malaysian public is not much to begin with as Malaysia does not even practice minimum wage,” she said. She said she now uses a debit card instead.

“It’s very easy to spend the money you don’t quite have. At the end of the month when the bill comes, you are left to figure out how to pay the amount that you owe,” she said.


Communication students Lai Chern Lin and Geoffrey Yeow who both use debit cards agreed with the move but were skeptical that it would solve the over-all credit card problem.


Lai said many young people, especially students, used supplementary credit cards under their parents’ principal accounts and thus escaped the income requirement.


“Supplementary credit cards have lower spending limit than principal credit cards, but parents still need to supervise their children to prevent overspending,” she cautioned.


Yeow said people should avoid credit cards to begin with, except when traveling and during emergencies.


“The habit of using credit cards is rampant and seems to have gone out of control,” he said.


“Most of them, upon obtaining their card, go on [a] spending spree without taking into account the interest rates and late repayment charges,” the official was quoted further. According to the latest figures by Bank Negara, credit card usage this year totals 10.8 million, an increase from 7.8 million in 2005.

By: Mohani Niza (26.10.10)